P8B more for poorest of poor

MANILA, Philippines—The poorest of poor Filipinos will enjoy an additional P8 billion in cash subsidies from the government, but this will only be made possible at the expense of the country’s rice farmers whose livelihood depends on selling what they produce to the National Food Authority.

Malacañang has scrapped P8 billion for the NFA in the proposed P1.645-trillion national budget for next year and intends to give the amount to the Department of Social Welfare and Development (DSWD), according to a briefing paper that Budget Secretary Florencio Abad presented to President Aquino and the rest of the Cabinet.

“We removed the P8-billion subsidy for rice procurement [for the] NFA and are proposing that this be used by the (DSWD) for rice subsidies to the poor,” Abad said in the document, a copy of which was obtained by the Inquirer.

Abad said that the tax subsidy for rice importation could be removed as the government plans to give to the private sector the function of rice importation, leaving NFA with the job of buffer stocking and regulation.
Unclear
It was not clear if Abad was referring to two different items in the NFA budget: The money for rice procurement that the agency uses to purchase palay from farmers or the tax expenditure subsidy that the NFA is entitled to when it imports rice in order to maintain the appropriate volumes of strategic buffer stocks.

But NFA Administrator Lito Banayo yesterday claimed that the removal of the P8 billion would adversely affect the agency’s ability to buy palay from the country’s farmers. He said the removal of the tax subsidy would not be problematic so long as the NFA buys imported rice at the right price.

Banayo further warned that the loss of the P8 billion would result in the NFA “probably [defaulting] on our loans.”

And since the NFA loans are guaranteed by the national government, the latter would end up shelling out more money for interest payments, he said.

“It’s like taking money from one pocket and just putting it in the other,” Banayo said in a phone interview.
Reservations
He said he had told the budget department about his reservations. But with the proposed budget now officially transmitted to Congress, it was now up to lawmakers to “rectify” the matter, he said.

“It’s not the job of the NFA to take care of the poorest of the poor. Let DSWD handle it, but not at our expense,” he said.

The NFA, in fact, has a public service function. It provides a subsidy to rice farmers by purchasing palay at prices usually higher than prevailing farmgate prices. It also sells rice to poor consumers at lower-than-market retail prices.

In the proposed 2011 budget, the DSWD’s allocation has been increased by 108.21 percent, from P16.5 billion to P34.3 billion. As a result, the DSWD jumped to sixth place from eighth among the 10 departments with the biggest allocation.

Furthermore, the allocation in the budget for maintenance and other operating expenses (MOOE) was increased by 10.2 percent, from the current P189.3 billion to P208.6 billion.

Abad explained the increase as being due to “larger funding for social services like the CCT (conditional cash transfer).”

Social services as a whole will enjoy a 7.9-percent increase, from P479.9 billion this year to P517.9 billion next year. –Christian V. Esguerra, Philippine Daily Inquirer